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Capitol Cleaners & Launderers Inc. v. Twining Restaurant Assoc. Inc.

Superior Court of Delaware, Sussex

February 20, 2018

Capitol Cleaners & Launderers Inc.
v.
Twining Restaurant Assoc. Inc.,

          SUBMITTED: November 22, 2017

          RICHARD F. STOKES, JUDGE

          Dear Counsel:

         This is my decision regarding Defendant Twining Restaurant Associates, Inc.'s Motion to Vacate Default Judgment pursuant to Superior Court Civil Rule 60(b). The motion to vacate the default judgment as to liability is denied for the reasons set forth herein. However, an inquisition on the amount of damages to which plaintiff is entitled should be scheduled.

         This is a breach of contract case wherein the Plaintiff, Capitol Cleaners & Launderers, Inc., ("Capitol" or "Plaintiff) claimed the Defendant, Twining Restaurant Associates, Inc., ("Nantucket"[1] or "Defendant") breached a service contract for linen cleaning services. Defendant corporation is owned and operated by David Twining ("Twining"). Twining is also the managing shareholder of Twining Lobster Shanty, Inc. ("Lobster Shanty"). Plaintiff corporation provided linen services to both Nantucket and Lobster Shanty.

         Plaintiff filed its Complaint on June 21, 2017. The Complaint alleged the Defendant failed to pay a past-due bill in the amount of $5, 213.97 and is responsible for liquidated damages in the amount of $57, 539.69 as a result of early termination of its cleaning contract. The total amount demanded by the Plaintiff was $62, 753.66, plus pre-judgment interest. The Summons and Complaint were served upon Twining on June 27, 2017 in person by the Sussex County Sheriff. No answer or entry of appearance was filed within the 20 days prescribed by law. Consequently, on August 16, 2017, Plaintiff obtained a Default Judgment pursuant to Superior Court Civil Rule 55 against the Defendant in the total amount of $72, 688.25, [2] plus post-judgment interest. The difference between the principal demanded by the Complaint and that set forth in the Direction to Enter Default Judgment is $799.16. In October, 2017, the Sheriff attempted to serve the Defendant a Writ of Execution by Levy, but could not do so as Twining refused to open the restaurant and advised the Sheriff that no property inside the restaurant belonged to the business.[3] On November 1, 2017, an Entry of Appearance was made by Defendant's attorney. This Motion subsequently was filed on November 9, 2017.

         In this Motion, Twining claims that after receiving a copy of the Complaint, he directed his bookkeeper on or about July 1, 2017 to "simply pay the outstanding and still somewhat disputed account balance."[4] He asserts the billing dispute between Capitol and Nantucket began in December 2016. Twining contends he believed the lawsuit was resolved after he paid the outstanding balance of $4, 005.67 in July 2017. An Entry of Default Judgment was made on or about August 16, 2017. At the time, he was managing two restaurants with over 100 employees during the busiest part of the summer season. Twining further asserts he was not aware of the liquidated damages claim in the Complaint and that there was no written contract between Capitol and Nantucket, or Lobster Shanty. Twining denies signing the service contract submitted by the Plaintiff, and asserts it is not his ordinary business practice to enter into a contract of this type.

         Twining further contends no one other than himself has the authority or power to contractually bind either Nantucket or the Lobster Shanty. He denies knowing whose signature it is on the contract which was attached by the Plaintiff in its response to this Motion.

         Plaintiff acknowledges that after the lawsuit commenced, the Defendant made a direct payment in the amount of $4, 005.67, which was credited to the total amount owed. However, the Plaintiff did not provide a calculation or show how the payment was applied to the total amount sought.[5] Plaintiff argues Defendant simply ignored the process by not taking any appropriate actions in response to the Complaint or otherwise defend itself. Plaintiff contends Defendant has not satisfied its burden of showing excusable neglect, which is the first step a moving party must establish before the Court considers the other factors of a meritorious defense and prejudicial effect in determining whether to grant a motion to vacate a default judgment.

         STANDARD OF REVIEW

         Superior Court Civil Rule 60(b) provides in relevant part as follows: "On motion and upon such terms as are just, the Court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect... ."[6] "A petition to set aside a default judgment is addressed to the sound discretion of the Court."[7] There are three factors a trial court must consider in determining whether to set aside a default judgment: "first, whether culpable conduct of the defendant led to the default and, if so, was it excusable; second, whether the defendant has a meritorious defense; and third, whether the plaintiff will be prejudiced."[8]

         Excusable neglect is defined as neglect which might have been the act of a reasonably prudent person under the circumstances.[9] The Court must examine the circumstances of each case in order to determine whether the conduct of the moving party was the conduct of a reasonably prudent person.[10] A defendant cannot have a judgment vacated when the defendant simply ignored the process.[11] The Court only should consider the elements of a meritorious defense and prejudice after a satisfactory showing of excusable neglect in failure to answer the complaint.[12]

         DISCUSSION

         a) Excusable Neglect

         The facts and circumstances of Defendant's inaction do not justify as excusable neglect. Twining, as Defendant corporation's agent, is a businessman with at least two restaurant establishments. He was aware of the lawsuit against Nantucket, and had knowledge of the default judgment that was entered against Nantucket, and yet, despite the advice of his "attorney acquaintance"[13] did not retain legal counsel for the business. Twining did not respond to the lawsuit in any meaningful way until he was subpoenaed in connection with the execution on the judgment, which was three months after the entry of judgment. Upon service of process, a reasonably prudent person would have at least consulted an attorney to assess his legal rights and obligations.

         Twining's argument that he was under the belief that the payment of $4, 005.67 resolved the lawsuit is unpersuasive. The Complaint clearly stated the Plaintiff was seeking a total amount of $62, 753.66 plus interest, which included $5, 213.97 of an overdue bill, and $57, 539.69 in liquidated damages. The question of enforceability of the ...


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